Correlation Between Sterling Capital and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Transamerica Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sterling Capital and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Intermediate and Transamerica Asset Allocation, you can compare the effects of market volatilities on Sterling Capital and Transamerica Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sterling Capital with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Transamerica Asset.
Diversification Opportunities for Sterling Capital and Transamerica Asset
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Transamerica is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Intermediate and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Sterling Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sterling Capital Intermediate are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Sterling Capital i.e., Sterling Capital and Transamerica Asset go up and down completely randomly.
Pair Corralation between Sterling Capital and Transamerica Asset
Assuming the 90 days horizon Sterling Capital is expected to generate 3.44 times less return on investment than Transamerica Asset. But when comparing it to its historical volatility, Sterling Capital Intermediate is 1.91 times less risky than Transamerica Asset. It trades about 0.06 of its potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,131 in Transamerica Asset Allocation on September 12, 2024 and sell it today you would earn a total of 265.00 from holding Transamerica Asset Allocation or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sterling Capital Intermediate vs. Transamerica Asset Allocation
Performance |
| Timeline |
| Sterling Capital Int |
| Transamerica Asset |
Sterling Capital and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Transamerica Asset
The main advantage of trading using opposite Sterling Capital and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Transamerica Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transamerica Asset will offset losses from the drop in Transamerica Asset's long position.| Sterling Capital vs. The National Tax Free | Sterling Capital vs. Artisan High Income | Sterling Capital vs. Alliancebernstein Bond | Sterling Capital vs. Doubleline Yield Opportunities |
| Transamerica Asset vs. Calvert Moderate Allocation | Transamerica Asset vs. Qs Moderate Growth | Transamerica Asset vs. College Retirement Equities | Transamerica Asset vs. Sa Worldwide Moderate |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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